Association for Public Policy Analysis & Management

The federal government spends billions of dollars through tuition vouchers and tax-credits to reduce the wide disparities in college attendance between students from families with higher and lower  incomes. A number of recent studies have fueled concern that the complexity of the application process for this aid undermines its effectiveness, leading to calls for simplification. The evidence base that simplification per se will increase enrollment of low income students is thin. This paper fills this gap in the literature by studying the impact of two types of simplification already available to subgroups of students in the federal financial aid application process on the enrollment of low-income individuals: a) a rule that automatically qualifies students for the maximum Pell grant amount; and b) a rule that qualifies students for a simplified aid calculation that eliminates the need for information on assets. Exploiting the fact that eligibility for both types of simplification is based on having income below a threshold amount and using near-universe data on aid applications, I test for enrollment effects using standard regression discontinuity methods that estimate the discontinuity in the density (or number of students enrolled) at these threshold points. The results show large enrollment effects of simplification. In light of the results I discuss the likely benefits and costs of several prominent simplification proposals which can be viewed as extending the simplification provisions studied here to a broader set (nearly all) of applicants.